As natural gas wells shut down offshore of Nova Scotia, Atlantic Canadian distributors, marketers and consumers are seeking speedy approval for replacement deliveries from Alberta and British Columbia (BC).
Enbridge Gas New Brunswick, Irving Oil Ltd. and New England NG Supply are asking the National Energy Board (NEB) to grant a request by TransCanada Corp. for accelerated review of a new service package on its cross-country gas Mainline.
“This service provides a very important link to alternative long-term natural gas supplies from Western Canada,” said New England NG, a regional marketer supplying an East Coast roster of manufacturing enterprises.
“Approval on a timely basis, to enable TransCanada to offer this service by Nov. 1, 2019, is extremely important,” Irving said. Natural gas fuels the 320,000 b/d New Brunswick plant that Irving operates in Saint John as Canada’s largest refinery.
Enbridge called gas from the Western Canada Sedimentary Basin (WCSB) “a valuable asset in meeting the needs of Atlantic Canada long-term.” The distributor described WCSB supplies as a welcome force for stability in the region. “The New England-Atlantic Canadian natural gas market is both the highest overall price and the most volatile in North America.”
The Atlantic Canadian gas customers are participants in a Mainline service package that TransCanada announced in December for deliveries to the East Coast, Ontario, Quebec and the United States.
Swift approval is sought by using an accelerated procedure for uncontested deals that the NEB called “streamlined.” The new Mainline package grants 10- to 21-year transportation contracts for 630 MMcf/d at a negotiated discount toll of C93 cents/gigajoule (GJ) (78 cents/MMBtu), with deliveries growing in stages that start Nov. 1, 2019, 2020 and 2021.
The Atlantic Canadian customers stand at the front of the shipper lineup. Records posted by the Canada-Nova Scotia Offshore Petroleum Board confirm that East Coast sea-floor production has fallen to zero following years of reserves depletion.
The well closures end 19 years of Nova Scotia production, leaving Canada’s Atlantic provinces to rely on gas imports from the United States via reversed flows on former export conduit Maritimes & Northeast Pipeline (M&NE).
In addition to making the shipping deal with TransCanada, the Atlantic Canadian gas customers indicate that they have made arrangements to receive WCSB supplies on M&NE via a roundabout pipeline route through the northeastern United States.
Hydraulic fracturing (fracking) bans rule out replacing offshore supplies with nearby Canadian gas from Quebec, Nova Scotia or New Brunswick. A new Conservative government in New Brunswick has yet to establish a promised regulatory process to let fracking into gas-rich areas that want the industrial activity.
Atlantic Canadian participation in TransCanada’s new Mainline service package highlights a wide gas cost gap that has opened between WCSB and U.S. production, making Alberta and BC preferred supply sources.
NEB records show a 2018 WCSB price average of C$1.44/GJ ($1.13/MMBtu) -- less than half the average $3.17/MMBtu (C$4.10) set over the past year by the Henry Hub gas benchmark.